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Housing Reform: From Attic to Cellar
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In order to provide more accommodation for middle- and low-income families, relevant government departments plan to reset price functions for low-rent apartments, more high-end apartments as well as price-capped commercial housing, the Beijing Morning Post reported on Thursday, quoting an anonymous source.

The current housing system, a combination of commercial, affordable and rent-only apartments, was adopted in 1998 and was principally designed to break down state house welfare and encourage house-buying.

However, many people are still not well accounted for under the current system, which has met with its fair share of complaints. At present, only 1 percent of families concerned qualify to live in low-rent apartments. Moreover, state-sponsored affordable housing, because of its comparatively low cost, is usually out of supply, leaving the majority of buyers as not being from the "middle- and low-income families" target. Meanwhile, prices of commercial apartments nationwide keep rising.

"Reform in the near future has become such a priority for the Ministry of Construction that 14 individual research departments have been set up," said an insider having attended the research and discussions on the issue.

According to mainstream concepts, low-rent apartment should be constructed for "minimum guarantee" households; rent-oriented affordable housing should be provided for those who are not qualified to benefit from low-rent apartment and who cannot pay for even low-price apartments; thus sale-oriented affordable housing will target low-income families. Price-capped commercial houses, a new kind of housing in the market, will be specifically sold to households looking to resettle.

The affordable housing system is one of the reform's centerpoints. Two proposals have already entered the final selection stage, namely rent-oriented alternatives and public housing as implemented in Hong Kong. Early reports seem to indicate that pressure groups favor rent-oriented proposals while affordable housing, now totally for sale, will turn to the rent market.

Since the reform concerns popular interests, a final decision is yet to be made, but government departments have reached consensus on expanding coverage for rent-oriented apartments.

"The reform measure can be brought forward at the end of this year, or early next year," added the source.

( by Tang Fuchun, August 25, 2006)

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